Hi all, can someone explain whether there is a set period on IO loans before you have to start paying back the principle, or whether the can run indefinately, or does it depend on the lender?
Also, is it worthwhile splitting the loan so that part (say 30%) is P&I and the remainder is IO? What are the pros and cons?
all advice will be appreciated.[juggle]
Thanks
Ron“Today is about creating Tomorow”
Most lenders have a term of 5 years for the IO period – some are ten. You can usually negotiate an extension.
I wouldn’t bother splitting the IO. Just make it 100% IO and then pay whatever you want into the loan. Just because it is IO doesn’t mean you cannot pay extra.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985NODOC Loan – 65% Loan – No questions asked! 6.85% Rate!!
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
The pro’s of P&I are paying down the loan!
The con’s are – less of the repayment is tax-deductable.
The pro’s of fixed interest are: Risk minimisation (hedging). – you might pay a premium for this.
It depends on your cashflow situation.
I would say if you are in an aggressive asset building phase – you might like to use interest only until you hit your plateau (wherever that is).
Then, as you sit & wait, you might like to fiddle some of the more CF+ deals to be P&I to gain equity quicker.
The interest only bit would have been useful for me during the High Cap Growth boom we just saw, but I chose P&I on intro rates because of the good rates. I am moving those to Int only, to aid my cashflow.
It really depends on your personal situation.
I have heard of some lenders offering up to 7 years IO but it’s more of a “friend of a friend” who told me..
Quite a few Lenders offer Interest only periods of up to 10 To 15 Years,
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
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